Noted in a recent article published in Best Review’s March 2023 magazine, many homeowners and business owners are underinsured making it more important than ever to work with an advisor to ensure you are protected against unknown out-of-pocket expenses.
So, what’s the issue?
With persistent inflationary pressure across the economy, property reconstruction costs, including materials and retail labor, continue to rise. As a result, insurance-to-value is becoming an even more pressing industry issue across both personal and commercial lines.
Here are some things you need to know about how inflation is impacting property insurance:
Commercial Property: Since the pandemic’s start, construction materials and labor costs have increased substantially, in some cases upwards of 50%. This situation has only been exacerbated by frequent and severe nationwide weather events.
As a business leader, it’s important to assess whether increasing building, contents (personal property), and business interruption values, along with a careful examination of business income and other policy limits, will help offer greater protection and peace of mind.
Homes: The article continues to state that it is estimated that nearly two-thirds of U.S. homes are underinsured, and the recent inflationary environment has only magnified the issue. A survey conducted by the American Property Casualty Insurance Association showed 70% of homeowners hadn’t adjusted their policies to account for rising building costs.
Here are some actions you can take to protect yourself:
Commercial Property:
- Work with an agent to assess your property values, business income limits, and policy limits.
- Consider increasing your building, contents, and business interruption values to protect your property and income better.
- Review your policy regularly to make sure you’re always properly protected against market fluctuations.
Homeowners:
- Check if your policies include an “inflation guard” to help address rising construction costs.
- Work with your agent to assess your coverage A value and make sure it’s still adequate for your needs.
- Update protection for the property inside your home as well.
- Report any updates or renovations to your agent to ensure that your policy is up to date.
Don’t let inflation leave you underinsured. Work with your agent to ensure that your property is properly protected.
